Walmart’s Ad Business Keeps Racking Up Blockbuster Growth to Bolster Profits
Retail Giant's Ad Business is Booming, with In-Store and Offsite Offerings on the Rise
6 min readHighlights
- Ad sales from marketplace sellers increased almost 50% in fiscal Q2.
- Revenue from Walmart Connect increases 30% year over year.
- E-commerce sales are a big driver of ad growth.
Source: Freepik_Free Vector _ Sale and Shopping Concept, Gentlemen use the call megaphone to call customers to buy in the shop.
Walmart again proved its mettle in advertising as its ad unit, Walmart Connect, reflected remarkable growth during the second quarter of fiscal year 2025. The strategic focus of the company has been toward expanding in-store and offsite advertising opportunities, and that has really paid off handsomely, driving sizable increases in ad revenue.
Marketplace Sellers Fuel Ad Sales Growth
Key to this has been the sharp increase in ad sales coming from marketplace sellers. These smaller and up-and-coming brands, utilizing Walmart’s marketplace, are key to this overall increase in revenue. Walmart CEO Doug McMillon says that ad sales coming from marketplace sellers increased almost 50% for the quarter, showing well the success of the company’s marketplace approach.
Walmart Connect Revenue Soars
The U.S. advertising business, Walmart Connect, increased 30% year-over-year in the second quarter, a fact that really underscores the robust growth trajectory amid rising demand for advertising opportunities within Walmart’s extensive network. Its global advertising business, including India’s Flipkart, witnessed a healthy uptick of 26% during the same period.
E-commerce Boom Boosts Onsite Advertising
Walmart’s e-commerce business has been another strong driver of its advertising unit. The strong presence online has given fertile ground to onsite advertising for the ennobling of reaching a huge and engaged audience. In the second quarter alone, global e-commerce sales rose 21% and yielded a considerable boost to the overall advertising business.
Expanding Advertising Reach
Over the last couple of years, Walmart Connect has been a very active pursuer of a strategy of out-of-channel expansion of its ad format offerings. It introduced new ad placements in-store, such as self-checkout lanes, TV aisles, sampling stations, and store radios. All these in-store initiatives have one thing in common: they seek to maximize the monetizing potential of Walmart’s extensive brick-and-mortar footprint.
Offsite Advertising Partnerships
In addition to in-store advertising, Walmart Connect has forged key alliances with top publishers like Disney to use first-party shopper data to drive targeted advertising across connected TVs. The collaboration gives Walmart more insight into placing better, more relevant ads to customers on multiple platforms.
Acquisition of Vizio Strengthens Video Advertising
This was further cemented when Walmart picked up Vizio back in March of this year. The smart TV technology belonging to Vizio offers the retailer a veritable goldmine of information on consumer viewing habits. That lucrative information makes Walmart’s ads more targeted and personalized.
Financial Performance and Outlook
The strong growth in Walmart’s ad business has been a big contributor to the company’s overall financial performance. For the second quarter, Walmart’s U.S. comparable sales increased by 4.2%, with consolidated revenues rising 4.8% to $169.3 billion. More than 50% of the operating income growth in the period came from advertising and membership growth.
And this is the positive response: Walmart now raises the full-year guidance and says it has gained sustained confidence in its growth trajectory. The various ways of generating revenue through advertising and several other strategic initiatives have bedecked the resilience of the business model.
For the second quarter of its fiscal 2025, retail giant Walmart once again proved itself a powerhouse in advertising. Walmart Connect, the ad unit for the e-commerce company, grew briskly this period. Strategic investments in in-store and offsite ad opportunities paid rich dividends and showed positive growth in ad revenue.
Marketplace Sellers Push Up Ad Sales Growth
Driving this growth has been a substantial increase in ad sales coming from marketplace sellers. Smaller and up-and-coming brands operating in Walmart’s marketplace ecosystem have been big contributors to the revenue surge. “Marketplace seller ad sales grew nearly 50% during the quarter, Walmart CEO Doug McMillon said, with that figure pointing to the successes of the company’s marketplace strategy.
Walmart Connect Revenue Surges
Walmart Connect, the retailer’s U.S. advertising business, saw revenue climb 30% year-over-year in the second quarter. That strong growth just points out that more marketers want to buy ads across Walmart’s ecosystem. Its global advertising business, which includes Flipkart in India, rose 26% during the same period.
E-commerce Boom Boosts Onsite Advertising
Meanwhile, another significant factor that has contributed to the growth in Walmart’s advertising business has been its e-commerce. A strong presence online has given the company fertile ground for onsite advertising, providing brands with a huge and engaging audience. During the second quarter, e-commerce sales surged 21% globally, pushing significantly overall advertising business.
Increasing Advertising Reach
Meanwhile, Walmart Connect has been working to extend its advertising reach away from just Walmart stores. It’s added new ad placements in stores, such as self-checkout lanes, TV aisles, sampling stations, and even store radios. This in-store effort will help Walmart fully monetize its vast brick-and-mortar reach for the first time.
Offsite Advertising Partnerships
In addition to its in-store advertising, Walmart Connect has signed a strategic partnership with publishers like Disney to leverage its first-party shopper data in targeted advertising across connected TV. The deal will allow Walmart to provide better and more effective ads cross-platform to its customers.
Acquisition of Vizio Strengthens Video Advertising
Walmart has, if anything, got stronger into the field of video advertising with this year’s acquisition of Vizio. Since Vizio is a smart TV company, Walmart will have a lot of insight into consumers’ viewing habits and thereby give more tailored and personalized ads to the target audience.
Financial Performance and Outlook
This strong growth in its ad business has turned into a serious contributor to the bottom-line growth of Walmart. For the second quarter, Walmart U.S. comparable sales rose 4.2%, while consolidated revenues increased 4.8% to $169.3 billion. In total, advertising and membership gains accounted for more than half of the operating income growth in the period.
With such encouraging results, Walmart increased its full-year outlook-a signal of continued confidence in its growth trajectory. The ability of the company to broaden these streams of revenue by way of advertising and other value-creating initiatives has further cemented the resilience of the business model.
The Future of Walmart Connect
With Walmart Connect still growing in reach and capabilities, the network is in an excellent position to become a dominant retail media player. From that giant network to leveraging first-party data, the scale offered presents advertisers with a unique opportunity to connect with an extremely engaged audience.
One area where Walmart Connect could further differentiate itself is on how it uses AI and ML technologies. By harnessing the power of AI, Walmart would be in a position to flesh out more sophisticated capabilities around targeting, personalized ad recommendations, and predictive analytics, all in a bid to optimize campaigns further.
Besides, Walmart can continue with finding new formats and channels of advertising in front of more audiences. It may include themed sponsorships, various influencer marketing activational activities, and immersive experiences: AR and VR.
Specifically, Walmart can work on the measurement and attribution capabilities of the ad platform. If it gives advertisers really good granular data about ad performance, Walmart can enable their customers to better manage campaigns for even better results.
The reality of an ever-changing retail landscape indicates that Walmart Connect is in prime positioning to be one of the leading retail media forces. Staying ahead of the trends and new technologies will help Walmart position itself as a sought-after partner among advertisers desiring connections with a huge and loyal customer base.
Conclusion
On the back of strategic expansion into in-store and offsite advertising, Walmart’s ad business has seen significant growth. With its extensive network, first-party data, and innovative technologies, it is well-positioned to continue the growth trajectory in the retail media market. As Walmart Connect continues to evolve, it will be well-positioned as a major player and afford advertisers unparalleled opportunities to connect with consumers and drive business growth.
Sources:
- https://www.marketingdive.com/news/walmart-q2-2024-earnings-retail-media-networks/724470/
- https://finance.yahoo.com/news/walmart-ad-unit-extends-blockbuster-103500995.html#:~:text=Walmart’s%20U.S.%20advertising%20unit%2C%20Walmart,%25%20year%2Dover%2Dyear.
- https://experientialdesigngroup.com/walmarts-ad-unit-extends-blockbuster-growth-streak-boosting-profits/
